<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CENTRAL NEWSPAPERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
CENTRAL NEWSPAPERS, INC.
200 East Van Buren Street
Phoenix, Arizona 85004
(602) 444-1100
April 7, 1999
To Our Shareholders:
You are cordially invited to attend the 1999 Annual Meeting of the
Shareholders of Central Newspapers, Inc. to be held on May 11, 1999 at our
headquarters at 200 East Van Buren Street, Phoenix, Arizona. The meeting will
start promptly at 10:00 A.M., Phoenix time.
We encourage you to read the enclosed Notice of Annual Meeting and Proxy
Statement. It explains the business to come before the meeting. At your earliest
convenience, please complete, date, sign, and return the accompanying proxy card
in the postage-paid envelope whether or not you plan to attend the meeting.
We have enclosed a copy of our Annual Report for 1998, which is not a
part of our proxy soliciting material.
Central Newspapers, Inc.
/s/ Louis A. Weil, III
Louis A. Weil, III
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
CENTRAL NEWSPAPERS, INC.
200 East Van Buren Street
Phoenix, AZ 85004
(602) 444-1100
April 7, 1999
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 11, 1999
Dear Shareholder:
Notice is hereby given that our Annual Meeting of Shareholders will be
held on Tuesday, May 11, 1999, at 10:00 A.M., Phoenix time, at our headquarters
at 200 East Van Buren Street, Phoenix, Arizona.
The Annual Meeting will be held for the following purposes:
1. To elect seven directors, each to serve for a one year term;
2. To approve the Central Newspapers, Inc. 1999 Long-Term Incentive
Plan; and
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 26, 1999 are
entitled to vote at the meeting.
These items of business are more fully described in the enclosed Proxy
Statement. We have enclosed a proxy card to assist you in the voting process. We
look forward to seeing you on May 11.
YOUR VOTE IS IMPORTANT!
ERIC S. TOOKER
Vice President, General Counsel,
and Corporate Secretary
PLEASE COMPLETE, DATE, AND SIGN
THE ACCOMPANYING PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS....................................... 1
PROPOSAL NO. 1 TO BE VOTED UPON
ELECTION OF DIRECTORS................................ 4
Board Committees..................................... 5
Recent Events........................................ 6
Meeting Attendance................................... 6
Director Compensation................................ 6
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS.................................... 8
BENEFICIAL OWNERS OF 5% OR MORE OF OUR COMMON STOCK......... 10
COMPENSATION OF NAMED EXECUTIVE OFFICERS.................... 12
Summary Compensation Table........................... 12
Option Grants, Exercises, and Holdings............... 14
Defined Benefit Plans................................ 15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..... 17
Objectives........................................... 17
Types of Compensation................................ 17
Annual Compensation.................................. 17
Long-Term Compensation............................... 19
Deductibility of Executive Compensation.............. 20
COMPANY PERFORMANCE......................................... 21
PROPOSAL NO. 2 TO BE VOTED UPON ADOPTION OF THE CENTRAL
NEWSPAPERS, INC. 1999 LONG-TERM INCENTIVE PLAN........ 22
Administration of 1999 Plan.......................... 22
Eligibility.......................................... 22
Limitation on Awards and Shares Available Under the
1999 Plan........................................... 23
Grants Under the 1999 Plan........................... 23
Amendment and Termination Under the 1999 Plan........ 25
Certain Federal Income Tax Consequences Under the
1999 Long-Term Incentive Plan....................... 25
New Plan Benefits.................................... 27
TERMINATION BENEFITS AGREEMENT.............................. 27
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 27
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE
ACT OF 1934........................................... 28
SHAREHOLDER PROPOSALS....................................... 28
General Matters...................................... 28
Director Nominations................................. 28
ANNUAL REPORT............................................... 29
OTHER MATTERS............................................... 29
APPENDIX A -- CENTRAL NEWSPAPERS, INC. 1999 LONG-TERM
INCENTIVE PLAN........................................ A-1
</TABLE>
i
<PAGE> 5
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q: WHAT AM I VOTING ON?
A: You are voting on the following:
1. The election of seven directors:
- William A. Franke;
- L. Ben Lytle;
- Kathryn L. Munro;
- Myrta J. Pulliam;
- Frank E. Russell;
- Richard Snell; and
- Louis A. Weil, III.
2. The approval of the Central Newspapers, Inc. 1999 Long-Term Incentive
Plan (the "1999 Plan")
The enclosed proxy is solicited by the Board of Directors. The proxy
materials relating to the Meeting are first being mailed to shareholders
entitled to vote at the Meeting on or about April 7, 1999.
The Board of Directors is not aware of any other matters that will be
brought before the shareholders for a vote. If any other matter is properly
brought before the Meeting, Thomas K. MacGillivray and Louis A. Weil, III,
acting as your proxies, will vote on your behalf, in their discretion.
- --------------------------------------------------------------------------------
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders of record as of the close of business on March 26, 1999 (the
Record Date) are entitled to vote at the Meeting. Each holder of a share
of Class A Common Stock is entitled to one-tenth of a vote per share on
all matters on which shareholders are entitled to vote. Each holder of a
share of Class B Common Stock is entitled to one vote per share on all
matters on which shareholders are entitled to vote.
- --------------------------------------------------------------------------------
Q: HOW DO I VOTE?
A: You can vote in person or by mail. To vote by mail, complete, sign, and
date each proxy card you receive and return it in the prepaid envelope.
Your shares will be voted as you indicate. If you do not indicate your
voting preferences, Thomas K. MacGillivray and Louis A. Weil, III, will
vote your shares FOR the election of the directors nominated and FOR the
approval of the 1999 Plan. You have the right to revoke your proxy any
time before the Meeting by 1) notifying our Corporate Secretary; 2)
voting in person; or 3) returning a later-dated proxy card.
- --------------------------------------------------------------------------------
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Proxy cards and ballots that identify individual shareholders are
confidential. Only the following persons have access to your vote: 1)
election inspectors; 2) individuals who help with processing and counting
the vote; and 3) persons who need access for legal reasons, including
defending against a claim.
1
<PAGE> 6
- --------------------------------------------------------------------------------
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It means your shares are registered differently and are in more than one
account. You should vote the shares on all your proxy cards. To provide
better shareholder services, we encourage you to have all your accounts
registered in the same name and address. You may do this by contacting
our transfer agent at Norwest Bank Minnesota, N.A., Shareowner Services
Department, P.O. Box 64854, Saint Paul, Minnesota, 55164-0854 tel., (800)
468-9716.
- --------------------------------------------------------------------------------
Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All shareholders as of the Record Date can attend and bring a guest.
Seating, however, is limited. Attendance at the Meeting will be on a
first-come, first-served basis, upon arrival at the Meeting.
- --------------------------------------------------------------------------------
Q: WHAT CONSTITUTES A QUORUM?
A: A majority of the outstanding shares as determined on the Record Date,
present or represented by proxy, constitutes a quorum for voting on
proposals at the Annual Meeting. If you submit a properly completed proxy
card, your shares will be part of the quorum. Under Indiana law, once a
share is represented for any purpose at a meeting, it is deemed present
for quorum purposes for the remainder of the meeting. On March 1, 1999,
there were 34,469,930 shares of our Class A Common Stock outstanding and
62,666,000 shares of our Class B Common Stock outstanding. Our Class A
and Class B Common Stock are referred to collectively as our "common
stock."
- --------------------------------------------------------------------------------
Q: WHAT VOTE IS REQUIRED TO APPROVE THE ITEMS TO BE VOTED UPON?
A: ELECTION OF DIRECTORS. The seven directors who receive the most votes
will be elected to the Board of Directors. A properly executed proxy
marked "WITHHOLD AUTHORITY" with respect to the election of one or more
directors will not be voted with respect to the director or directors
indicated, although it will be counted for purposes of determining
whether there is a quorum. A broker non-vote will also have no effect on
the outcome since only a plurality of votes actually cast is required to
elect a director.
APPROVAL OF CENTRAL NEWSPAPERS, INC. 1999 LONG-TERM INCENTIVE
PLAN. Approval of the plan requires the affirmative vote of the majority
of the votes cast on the proposal, provided that the total vote cast on
the proposal represents over 50% in interest of all securities entitled
to vote on the proposal. An abstention or broker non-vote will have the
effect of a vote "AGAINST" the proposal, unless holders of more than 50%
in interest of all securities entitled to vote on the proposal cast
votes, in which event neither an abstention nor a broker non-vote will
have any effect on the result of the vote.
OTHER ITEMS. For each other item that may properly come before the
Meeting, approval requires that the number of shares voted "FOR" the item
exceed the number of shares voted "AGAINST." Abstentions and broker
non-votes will have no effect on the outcome since only a plurality of
votes actually cast is required to approve an item.
2
<PAGE> 7
- --------------------------------------------------------------------------------
Q: WHEN ARE THE SHAREHOLDER PROPOSALS DUE FOR THE 2000 ANNUAL MEETING?
A: In order to be considered for next year's Proxy Statement, shareholder
proposals must be in writing, addressed to Eric S. Tooker, Corporate
Secretary, Central Newspapers, Inc., 200 East Van Buren Street, Phoenix,
Arizona 85008, and received by December 2, 1999.
- --------------------------------------------------------------------------------
Q: HOW MUCH DID THIS PROXY SOLICITATION COST?
A: We hired Corporate Investor Communication, Inc. to assist in the
distribution of proxy materials. The estimated fee is $1,000.00, plus
reasonable out-of-pocket expenses. In addition, we will reimburse
brokerage houses and other custodians, nominees, and fiduciaries for
their reasonable out-of-pocket expenses for forwarding proxy material to
the owners of common stock.
- --------------------------------------------------------------------------------
You may request additional information regarding CNI by contacting:
<TABLE>
<S> <C> <C>
Central Newspapers, Inc. or by visiting our website at:
200 East Van Buren Street www.centralnews.com
Phoenix, Arizona 85004
(602) 444-1100
</TABLE>
3
<PAGE> 8
PROPOSAL NO. 1 TO BE VOTED UPON
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
THE SEVEN DIRECTOR NOMINEES LISTED BELOW
Seven directors will be elected at the meeting for a one year term.
Unless you specify otherwise, the enclosed proxy will be voted in favor of
electing as directors the nominees listed below. If any nominee should be unable
to serve, the proxy will be voted for a substitute nominee selected by our Board
of Directors.
The name, principal occupation, business experience since at least 1993,
tenure, and age of each nominee for election as a director are as set forth
below.
WILLIAM A. FRANKE, age 62, has been the Chairman and Chief Executive
Officer of America West Holdings Corporation, an aviation and travel service
company, and the Chairman of the Board of its principal subsidiary, America West
Airlines, Inc., an airline carrier, since February 1997. Mr. Franke was the
subsidiary's Chief Executive Officer from December 1993 until February 1997 and
its President from May 1996 until February 1997. He is a director of America
West Holdings Corporation and each of its major subsidiaries. He is also a
director of Phelps Dodge Corporation, Beringer Wine Estates Inc., Mtel Latin
America, Inc., AerFi Group, plc., an Irish aircraft finance and leasing company
and the AirTransport Association of America. He is a director and Chairman of
the Board of Airplanes Limited and a controlling trustee and Chairman of
Airplanes U.S. Trust, entities involved in aircraft financing and leasing. He is
also a Managing Partner of Newbridge Latin America, LLP, a private equity fund
focused on Latin American investments. He has been on our Board of Directors
since 1990.
L. BEN LYTLE, age 52, has been President and Chief Executive Officer of
Anthem Insurance Companies, Inc., an insurance holding company, since 1989 and
presently serves as Chairman of the Board of Directors of each of its major
subsidiaries. He is a director of IPALCO Inc., Duke REIT, Allscripts, Inc., The
Blue Cross and Blue Shield Association, Health Insurance Association of America
and the American Association of Health Plans. He has been on our Board of
Directors since 1997.
KATHRYN L. MUNRO, age 50, has been a Partner in the Tahoma Venture Fund
since February 1999. Ms. Munro served as the Chief Executive Officer, Southwest
Banking Group for Bank of America from 1996 until 1998. She served as President,
Bank of America Arizona from 1994 through 1996. She served on the Bank of
America Arizona Board from 1994 through 1998. From 1993 to 1994, Ms. Munro
served as Executive Vice President and Manager of the Retail Systems and
Services Division of Seafirst Bank in Seattle, Washington. She has been on our
Board of Directors since March 9, 1999. She has served as Chair on the Board of
Directors for the Valley of the Sun United Way; Vice Chair, Board of Directors,
University of Arizona Foundation; and Vice Chair, Bank Administration Institute.
She is a member of the Boards of Directors of the Heard Museum; Greater Phoenix
Leadership; Morrison Institute for Public Policy; Barrow Neurological Institute;
and Fresh Start Women's Foundation. She also serves on the corporate board of
directors for Flow International, Inc. and on the national advisory board for
the University of Arizona School of Business.
4
<PAGE> 9
MYRTA J. PULLIAM, age 51, has been the Director of Electronic News and
Information for Indianapolis Newspapers, Inc. since 1994. Ms. Pulliam served as
the Assistant Managing Editor/ News at The Indianapolis Star from 1991 through
1994. From 1986 to 1991, she was the Assistant Managing Editor/Graphics at The
Indianapolis Star. Ms. Pulliam has over thirty years of experience in the
newspaper industry. She has served on the Queens College Alumni Board, the Read
Indiana Literacy Foundation Development Board, and the Indianapolis Museum of
Art Board of Trustees. She has been on our Board of Directors since March 9,
1999.
FRANK E. RUSSELL, age 78, served as the Chairman of our Board of
Directors and Assistant Secretary from 1996 to 1998. Mr. Russell served as our
President and Chief Executive Officer from 1979 through 1995. He has been on our
Board of Directors since 1974.
RICHARD SNELL, age 68, has been Chairman of the Board of Pinnacle West
Capital Corporation, a utility holding company, and Chairman of the Board of
Arizona Public Service Company since 1990. He served as Chief Executive Officer
of Pinnacle West Capital Corporation from 1990 to February 1999. He is also a
director of Aztar Corporation and Bank One Arizona Corporation. He has been on
our Board of Directors since 1996.
LOUIS A. WEIL, III, age 58, has served as the Chairman of our Board of
Directors since January 1, 1999 and has been our President and Chief Executive
Officer since January 1, 1996. From August 1991 through December 1995, Mr. Weil
served as Publisher and Chief Executive Officer of The Arizona Republic and The
Phoenix Gazette and Executive Vice President of Phoenix Newspapers, Inc. Mr.
Weil served as U.S. Publisher of Time Magazine from May 1989 to March 1991, and
President and Publisher of The Detroit News from February 1986 to May 1989. Mr.
Weil serves as an independent director of the Domestic Equity, Global Debt and
Long-term Municipal and Domestic Taxable Bond family of mutual funds managed by
Prudential. He has been on our Board of Directors since 1991.
BOARD COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee, an
Executive Committee, and a Nominating Committee.
Audit Committee 2 meetings in 1998
-- recommends the firm that CNI should retain as its independent
accountants;
-- reviews the audit and non-audit activities of the independent
accountants; and
-- reviews the financial statements, accounting practices, and adequacy of
our auditing and internal controls.
Compensation Committee 3 meetings in 1998
-- reviews the Company's executive development process;
-- sets the compensation for the Chief Executive Officer and the other ten
most highly compensated employees of CNI and our subsidiaries; and
-- certifies and grants awards under our Amended and Restated Stock
Compensation Plan.
5
<PAGE> 10
Executive Committee All 1998 actions taken by written consent
-- has all authority of the Board of Directors during intervals between
meetings of the Board, subject to limitations imposed by law, by
subsequent resolution of the Board of Directors, or by the By-Laws.
Nominating Committee 1 meeting in 1998
-- reviews the qualifications of individuals for election as members of
the Board;
-- reviews shareholder recommendations for Board Membership; and
-- recommends qualified individuals to be considered for Board membership.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
COMMITTEE MEMBERSHIP
----------------------------------------------------------------------------------------------------------------
NAME AUDIT COMPENSATION EXECUTIVE NOMINATING
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William A. Franke X X*
----------------------------------------------------------------------------------------------------------------
L. Ben Lytle X X
----------------------------------------------------------------------------------------------------------------
Kathryn L. Munro X
----------------------------------------------------------------------------------------------------------------
Frank E. Russell X X*
----------------------------------------------------------------------------------------------------------------
Richard Snell X* X
----------------------------------------------------------------------------------------------------------------
Louis A. Weil, III X* X
----------------------------------------------------------------------------------------------------------------
</TABLE>
* Chairman
RECENT EVENTS
On January 20, 1999, Eugene S. Pulliam, a director on our Board since
1954, died. Mr. Pulliam had served as the Publisher of The Indianapolis Star and
The Indianapolis News since 1975 and was President of Phoenix Newspapers, Inc.
from 1970 until 1997. Mr. Pulliam served on the Nominating Committee and the
Executive Committee.
On January 22, 1999, Dan Quayle, a director on our Board since 1993,
resigned. Mr. Quayle is currently pursuing the Republican Presidential
nomination for the year 2000. Mr. Quayle served on the Compensation Committee.
MEETING ATTENDANCE
The Board of Directors held a total of six meetings in 1998. All of the
directors attended at least 75 percent of the meetings of the Board and
committees of the Board on which such director served.
DIRECTOR COMPENSATION
Non-employee directors receive:
-- an annual retainer of $20,000;
-- $1,000 for each meeting of the Board attended;
-- $750 for each committee meeting attended;
6
<PAGE> 11
-- an annual grant of stock options to purchase 1,000 shares of our
Class A Common Stock upon election or re-election to the Board;
and
-- reimbursement for out-of-pocket expenses associated with
attending Board and committee meetings.
Employee directors receive no additional compensation for serving on the Board
but are reimbursed for out-of-pocket expenses associated with attending Board
and Committee meetings.
The stock options are granted at an exercise price equal to the fair market
value of the Class A Common Stock on the date of grant, vest six months after
the date of grant, and expire ten years from the date of grant.
Non-employee directors receive certain life insurance coverage. William
A. Franke and L. Ben Lytle receive coverage under split-dollar life insurance
arrangements pursuant to which CNI will be reimbursed for premiums paid. The
dollar value benefit of the premiums paid pursuant to such policies in 1998 was
$2,942 and $8,709 for Mr. Franke and Mr. Lytle, respectively. Richard Snell
receives coverage under a death benefit only arrangement. For 1998, the current
year term cost of such insurance for Mr. Snell was $971. All directors also
participate in our Directors' and Officers' Charitable Award Program. Under this
program, upon the death of a participating officer or director, we will donate
$500,000 to one or more qualifying charitable organizations chosen by the
participant and we will be reimbursed for the premium payments from the life
insurance proceeds. Individual participants derive no financial benefit from
this program because all charitable deductions accrue solely to CNI.
The following table details the beneficial ownership of our Class A
Common Stock and Class B Common Stock, as of March 1, 1999 by our directors and
named executive officers. Unless otherwise indicated, each shareholder below has
sole investment and voting power with respect to the shares shown as
beneficially owned by him or her.
7
<PAGE> 12
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
- ---------------------------------------------------------------------------------------------------------------
DIRECTORS, NOMINEES PERCENT OF
AND EXECUTIVE OFFICERS TITLE OF CLASS NUMBER OF COMMON SHARES CLASS(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dale A. Duncan Class A Common Stock 14,000(2) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
William A. Franke Class A Common Stock 12,000(3) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
L. Ben Lytle Class A Common Stock 5,090(4) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
Thomas K. MacGillivray Class A Common Stock 105,160(5) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
Kathryn L. Munro Class A Common Stock -0- --
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
John F. Oppedahl Class A Common Stock 135,498(6) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
Myrta J. Pulliam Class A Common Stock 3,831,946(7) 11.1%
Class B Common Stock 50,515,000(8) 80.6%
- ---------------------------------------------------------------------------------------------------------------
Frank E. Russell Class A Common Stock 3,573,600(9) 10.4%
Class B Common Stock 53,530,000(10) 85.4%
- ---------------------------------------------------------------------------------------------------------------
Richard Snell Class A Common Stock 4,000(11) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
Eric S. Tooker Class A Common Stock 17,159(12) *
Class B Common Stock -0- --
- ---------------------------------------------------------------------------------------------------------------
Louis A. Weil, III Class A Common Stock 485,817(13) 1.4%
Class B Common Stock 45,815,000(14) 73.1%
- ---------------------------------------------------------------------------------------------------------------
All Directors, Nominees and Class A Common Stock 8,184,270 23.7%
Executive Officers as a Group Class B Common Stock 58,230,000 92.9%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) Calculated pursuant to Rule 13d-3(d)(1) promulgated under the Securities
Exchange Act of 1934, as amended, except that percentages do not reflect
rights to acquire shares of Class A Common Stock through conversion of
shares of Class B Common Stock. Each share of Class B Common Stock is
convertible into 1/10 of a share of Class A Common Stock.
(2) Includes options held by Mr. Duncan which are currently exercisable for
8,000 shares of Class A Common Stock.
(3) Includes options held by Mr. Franke which are currently exercisable for
8,000 shares of Class A Common Stock.
(4) Includes options held by Mr. Lytle which are currently exercisable for
4,000 shares of Class A Common Stock.
(5) Includes (a) 3,000 restricted shares, (b) 3,661 shares held for the
benefit of Mr. MacGillivray by the Savings Plus Plan and (c) options
held by Mr. MacGillivray which are currently exercisable for 91,999
shares of Class A Common Stock.
(6) Includes (a) 1,915 shares held for the benefit of Mr. Oppedahl by the
Savings Plus Plan and (b) options held by Mr. Oppedahl which are
currently exercisable for 128,333 shares of Class A Common Stock.
(7) Includes (a) options held by Ms. Pulliam which are currently exercisable
for 15,998 shares of Class A Common Stock, (b) 3,557,148 shares held by
the Eugene S. Pulliam Revocable Trust, of which Ms. Pulliam and Russell
B. Pulliam are Trustees with shared voting and investment power, as to
which shares Ms. Pulliam
8
<PAGE> 13
disclaims beneficial ownership and (c) options held by the estate of
Eugene S. Pulliam which are currently exercisable for 210,000 shares of
Class A Common Stock. Ms. Pulliam and Russell B. Pulliam are executors
of the estate.
(8) Includes (a) 45,815,000 shares held by the Eugene C. Pulliam Trust of
which Ms. Pulliam, Louis A. Weil, III and Frank E. Russell are Trustees
with shared voting and investment power, as to which shares Ms. Pulliam
disclaims beneficial ownership, and (b) 4,655,000 shares held by the
Eugene S. Pulliam Revocable Trust of which Ms. Pulliam and Russell B.
Pulliam are Trustees with shared voting and investment power, as to
which shares Ms. Pulliam disclaims beneficial ownership.
(9) Includes (a) 30,000 shares owned by Nancy M. Russell, wife of Frank E.
Russell, as to which shares Mr. Russell disclaims beneficial ownership,
(b) 700,400 shares held in five separate trusts for which Frank E.
Russell acts as sole Trustee and as to which Mr. Russell disclaims
beneficial ownership, (c) 2,147,200 shares held by the Nina Mason
Pulliam Charitable Trust of which Mr. Russell is Trustee, as to which
shares Mr. Russell disclaims beneficial ownership, and (d) options held
by Mr. Russell which are currently exercisable for 415,000 shares of
Class A Common Stock.
(10) Includes (a) 45,815,000 shares owned by the Eugene C. Pulliam Trust of
which Mr. Russell, Louis A. Weil, III and Myrta J. Pulliam are Trustees
with shared voting and investment power, as to which shares Mr. Russell
disclaims beneficial ownership and (b) 7,465,000 shares held in the Nina
Mason Pulliam Charitable Trust of which Mr. Russell is Trustee, as to
which shares Mr. Russell disclaims beneficial ownership.
(11) Includes options held by Mr. Snell which are currently exercisable for
4,000 shares of Class A Common Stock.
(12) Includes (a) 7,000 restricted shares, (b) 492 shares held for the
benefit of Mr. Tooker by the Savings Plus Plan and (c) options held by
Mr. Tooker which are currently exercisable for 8,667 shares of Class A
Common Stock.
(13) Includes (a) 14,000 restricted shares, (b) 3,151 shares held for the
benefit of Mr. Weil by the Savings Plus Plan, (c) options held by Mr.
Weil which are currently exercisable for 449,666 shares of Class A
Common Stock, and (d) 5,000 shares held by the Louis A. Weil, III Family
Trust.
(14) Includes 45,815,000 shares held by the Eugene C. Pulliam Trust of which
Mr. Weil, Myrta J. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power, as to which shares Mr. Weil disclaims
beneficial ownership.
The above table reports beneficial ownership in accordance with Rule
13d-3 under the Securities Exchange Act of 1934. This means, except as noted
below, all CNI securities over which the directors, nominees, and executive
officers directly or indirectly have or share voting or investment power are
listed as beneficially owned.
9
<PAGE> 14
The table below lists those persons whom we know beneficially own more
than 5% of the outstanding shares of our Class A Common Stock or Class B Common
Stock as of March 1, 1999 (based on the best information available to us on that
date). To our knowledge, each shareholder has sole investment and voting power
with respect to the shares shown as beneficially owned.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BENEFICIAL OWNERS OF 5% OR MORE OF OUR COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER(1) TITLE OF CLASS BENEFICIAL OWNERS CLASS(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Eugene C. Pulliam Trust Class A Common Stock -0- *
Class B Common Stock 45,815,000 73.1%
- ---------------------------------------------------------------------------------------------------------------
Nina Mason Pulliam Class A Common Stock 2,147,200(3) 6.2%
Charitable Trust Class B Common Stock 7,465,000(3) 11.9%
- ---------------------------------------------------------------------------------------------------------------
Eugene S. Pulliam Revocable Trust Class A Common Stock 3,557,148 10.3%
307 North Pennsylvania Street Class B Common Stock 4,655,000 7.4%
Indianapolis, Indiana 46204
- ---------------------------------------------------------------------------------------------------------------
Louis A. Weil, III Class A Common Stock 485,817(4) 1.4%
Class B Common Stock 45,815,000(5) 73.1%
- ---------------------------------------------------------------------------------------------------------------
Myrta J. Pulliam Class A Common Stock 3,831,946(6) 11.1%
Class B Common Stock 50,515,000(7) 80.6%
- ---------------------------------------------------------------------------------------------------------------
Russell B. Pulliam Class A Common Stock 3,853,418(8) 11.2%
Class B Common Stock 4,700,000(9) 7.5%
- ---------------------------------------------------------------------------------------------------------------
Frank E. Russell Class A Common Stock 3,573,600(10)() 10.4%
Class B Common Stock 53,530,000(11) 85.4%
- ---------------------------------------------------------------------------------------------------------------
Ariel Capital Management, Inc. Class A Common Stock 3,443,339(12) 10.0%
307 North Michigan Avenue Class B Common Stock -0- *
Chicago, Illinois 60601
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) Unless otherwise specified, all addressees: 200 East Van Buren Street,
Phoenix, Arizona 85004.
(2) Calculated pursuant to Rule 13d-3(d)(1) promulgated under the Securities
Exchange Act of 1934, as amended, except that percentages do not reflect
rights to acquire shares of Classes A Common Stock through conversation
of shares of Class B Common Stock. Each share of Class B Common Stock is
convertible into 1/10 of a share of Class A Common Stock.
(3) CNI has filed a registration statement on Form S-3 to resell shares of
Class A Common Stock currently held by the Nina Mason Pulliam Charitable
Trust. The Trust would sell up to 2,673,699 shares in the offering. As
of March 15, 1999, no shares had been sold in such offering.
(4) Includes (a) 14,000 restricted shares, (b) 3,151 shares held for the
benefit of Mr. Weil by the Savings Plus Plan, (c) options held by Mr.
Weil which are currently exercisable for 449,666 shares of Class A
Common Stock, and (d) 5,000 shares held by the Louis A. Weil, III Family
Trust.
(5) Includes 45,815,000 shares held by the Eugene C. Pulliam Trust of which
Mr. Weil, Myrta J. Pulliam and Frank E. Russell are Trustees with shared
voting and investment power, as to which shares Mr. Weil disclaims
beneficial ownership.
(6) Includes (a) options held by Ms. Pulliam which are currently exercisable
for 15,998 shares of Class A Common Stock, (b) 3,557,148 shares held by
the Eugene S. Pulliam Revocable Trust, of which Ms. Pulliam and Russell
B. Pulliam are Trustees with shared voting and investment power, as to
which shares Ms. Pulliam disclaims beneficial ownership, and (c) options
held by the estate of Eugene S. Pulliam which are currently exercisable
for 210,000 shares of Class A Common Stock of which Ms. Pulliam and
Russell B. Pulliam are executors of the estate.
10
<PAGE> 15
(7) Includes (a) 45,815,000 shares held by the Eugene C. Pulliam Trust of
which Ms. Pulliam, Louis A. Weil, III and Frank E. Russell are Trustees
with shared voting and investment power, as to which shares Ms. Pulliam
disclaims beneficial ownership, and (b) 4,655,000 shares held by the
Eugene S. Pulliam Revocable Trust of which Ms. Pulliam and Russell B.
Pulliam are Trustees with shared voting and investment power, as to
which shares Ms. Pulliam disclaims beneficial ownership.
(8) Includes (a) 386 shares held for the benefit of Mr. Pulliam by the
Savings Plus Plan, (b) options held by Mr. Pulliam which are currently
exercisable for 29,332 shares of Class A Common Stock, (c) 3,557,148
shares held by the Eugene S. Pulliam Revocable Trust, of which Mr.
Pulliam and Myrta J. Pulliam are Trustees with shared voting and
investment power, as to which shares Mr. Pulliam disclaims beneficial
ownership, and (d) options held by the estate of Eugene S. Pulliam which
are currently exercisable for 210,000 shares of Class A Common Stock of
which Mr. Pulliam and Myrta J. Pulliam are executors of the estate.
(9) Includes 4,655,000 shares held by the Eugene S. Pulliam Revocable Trust,
of which Mr. Pulliam and Myrta J. Pulliam are trustees with shared
voting and investment power, as to which shares Mr. Pulliam disclaims
beneficial ownership.
(10) Includes (a) 30,000 shares owned by Nancy M. Russell, wife of Frank E.
Russell, as to which shares Mr. Russell disclaims beneficial ownership,
(b) 700,400 shares held in five separate trusts for which Frank E.
Russell acts as sole Trustee and as to which Mr. Russell disclaims
beneficial ownership, (c) 2,147,200 shares held by the Nina Mason
Pulliam Charitable Trust of which Mr. Russell is Trustee, as to which
shares Mr. Russell disclaims beneficial ownership, and (d) options held
by Mr. Russell which are currently exercisable for 415,000 shares of
Class A Common Stock.
(11) Includes (a) 45,815,000 shares owned by the Eugene C. Pulliam Trust of
which Mr. Russell, Louis A. Weil III and Myrta J. Pulliam are Trustees
with shared voting and investment power, as to which shares Mr. Russell
disclaims beneficial ownership and (b) 7,465,000 shares held in the Nina
Mason Pulliam Charitable Trust of which Mr. Russell is Trustee, as to
which shares Mr. Russell disclaims beneficial ownership.
(12) Ariel Capital Management, Inc. holds all such shares for client
accounts, none of which individually represents more than 5% of the
outstanding Class A Common Stock, and disclaims beneficial ownership of
such shares. Ariel Capital Management, Inc., in its capacity as
investment advisor, has sole voting power and sole dispositive power
with respect to 3,443,339 shares. The information contained in this
section was obtained from a Schedule 13G dated February 8, 1999 filed by
Ariel Capital Management, Inc. with the Securities and Exchange
Commission. The Company makes no representation as to the accuracy or
completeness of the information reported.
11
<PAGE> 16
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth the compensation for services rendered to
CNI and its primary operating subsidiaries, Phoenix Newspapers, Inc. ("PNI") and
Indianapolis Newspapers, a division of Indiana Newspapers, Inc. ("INI"), during
the fiscal year ended December 27, 1998, paid to the Chief Executive Officer and
the four other most highly compensated executive officers during the fiscal year
ended December 27, 1998. The amounts shown include both amounts paid and amounts
deferred.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- ------------------------------------------------------------------------------------------------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III 1998 521,667 198,750 (1) -0-(3) 100,000 63,590(7)
Chairman & CEO 1997 472,500 360,000 (1) -0- 30,000 78,890(8)
1996 435,150 304,500 (1) 505,750 160,000 68,423(9)
- ------------------------------------------------------------------------------------------------------------------------
John F. Oppedahl 1998 314,167 113,316 (1) -0-(4) 28,000 55,384(7)
President and CEO 1997 287,500 172,956 (1) -0- 13,500 60,793(8)
of PNI 1996 275,150 146,300 (1) 252,875 60,000 27,885(9)
- ------------------------------------------------------------------------------------------------------------------------
Thomas K. MacGillivray 1998 255,000 76,500 (1) -0-(5) 28,000 33,712(7)
Vice President and CFO 1997 215,200 129,000 118,505(2) 106,313 13,500 34,215(8)
1996 190,150 106,400 (1) 180,625 64,000 17,440(9)
- ------------------------------------------------------------------------------------------------------------------------
Dale A. Duncan 1998 255,000 66,583 (1) -0- 24,000 65,757(7)
President of INI 1997 -0- -0- (1) -0- -0- -0-
1996 -0- -0- (1) -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------
Eric S. Tooker 1998 208,333 63,000 (1) -0-(6) 14,000 27,500(7)
Vice President, Secretary 1997 182,701 110,000 119,157(2) 69,375 6,000 27,394(8)
and General Counsel 1996 101,228 55,552 (1) 93,750 20,000 14,366(9)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Executive officers of CNI receive certain perquisites, but with respect
to this executive officer the incremental cost of providing such
perquisites does not exceed the lesser of $50,000 or 10% of the officer's
salary and bonus.
(2) Indicates total amounts paid for relocation expenses for each executive
officer's relocation to Phoenix.
(3) At the close of the 1998 fiscal year, Mr. Weil held 28,000 restricted
shares, the aggregate value of which was $959,875. Dividends are
currently paid on the restricted shares.
(4) At the close of the 1998 fiscal year, Mr. Oppedahl held 14,000 restricted
shares, the aggregate value of which was $479,937.50. Dividends are
currently paid on the restricted shares.
(5) At the close of the 1998 fiscal year, Mr. MacGillivray held 13,000
restricted shares, the aggregate value of which was $445,656.25.
Dividends are currently paid on the restricted shares.
(6) At the close of the 1998 fiscal year, Mr. Tooker held 7,000 restricted
shares, the aggregate value of which was $239,968.75. Dividends are
currently paid on the restricted shares.
(7) Includes the following for Messrs. Weil, Oppedahl, MacGillivray, Duncan,
and Tooker: (a) CNI matching contributions to the Savings Plus Plan of
$3,150, $3,783, $4,750, $4,524, and $4,750 for each named executive
officer, respectively, (b) CNI matching contributions to our
Non-Qualified Savings Plan of $16,847, $12,719, $8,720, $542, and $4,414
for each named executive officer, respectively, (c) dollar value benefits
for premium payments under split-dollar life insurance policies under
which the CNI will be reimbursed for premiums paid in the amounts of
$34,876, $30,164, $11,524, $52,387, and $13,977 for each named executive
officer, respectively, and (d) automobile allowances in the amounts of
$8,718, $8,718, $8,718, $8,304, and $4,359 for each named executive
officer, respectively.
(8) Includes the following for Messrs. Weil, Oppedahl, MacGillivray, and
Tooker: (a) Company matching contributions to the Savings Plus Plan of
$4,750, (b) Company matching contributions to the Company's Non-
12
<PAGE> 17
Qualified Savings Plan of $28,550, $13,668, $9,018, and $3,915 for each named
executive officer, respectively, (c) dollar value benefits for premium payments
under split-dollar life insurance policies under which the Company will be
reimbursed for premiums paid in the amounts of $36,872, $33,657, $11,893,
and $14,430 for each named executive officer, respectively, and (d)
automobile allowances in the amounts of $8,718, $8,718, $8,554, and $4,299
for each named executive officer, respectively.
(9) Includes the following amounts for Messrs. Weil, Oppedahl and
MacGillivray: (a) CNI matching contributions to the Savings Plus Plan of
$4,750 and (b) CNI matching contributions to our Non-Qualified Savings
Plan of $24,836, $12,108, and $7,112 for each named executive officer,
respectively. Includes for Messrs. Weil, Oppedahl, MacGillivray and
Tooker the dollar value benefits for premium payments under split-dollar
life insurance policies under which CNI will be reimbursed for premiums
paid in the amounts of $38,837, $11,027, $5,578, and $14,366, for each
named executive officer, respectively.
13
<PAGE> 18
OPTION GRANTS, EXERCISES, AND HOLDINGS
The following tables provide information relating to option grants,
exercises, and holdings for each of the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE ASSUMING
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENTAGE OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES PRICE PER EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR SHARE DATE 5%(2) 10%(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III 100,000(1) 13.92% $36.00 03/02/08 $2,264,021 $5,737,473
- --------------------------------------------------------------------------------------------------------------------
John F. Oppedahl 28,000(1) 3.90% $36.00 03/02/08 $ 633,926 $1,606,492
- --------------------------------------------------------------------------------------------------------------------
Thomas K. MacGillivray 28,000(1) 3.90% $36.00 03/02/08 $ 633,926 $1,606,492
- --------------------------------------------------------------------------------------------------------------------
Dale A. Duncan 24,000(1) 3.34% $36.00 03/02/08 $ 543,365 $1,376,993
- --------------------------------------------------------------------------------------------------------------------
Eric S. Tooker 14,000(1) 1.95% $36.00 03/02/08 $ 316,963 $ 803,246
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options vest in the equal annual installments beginning on March 2,
1999.
(2) Based on a market value of $34.2813 per share at December 27, 1998. These
gains are based upon assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over
the full option term. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on option exercises and Class A
Common Stock holdings are dependent on the future performance of our
Class A Common Stock and overall stock market conditions. There can be no
assurance that the amounts reflected on this table will be achieved.
14
<PAGE> 19
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END FISCAL YEAR-END*
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Louis A. Weil, III -0- -- 326,333 226,667 $6,810,818 $1,930,213
- -------------------------------------------------------------------------------------------------------------------
John F. Oppedahl -0- -- 90,500 73,000 $1,766,047 $ 673,969
- -------------------------------------------------------------------------------------------------------------------
Thomas K. MacGillivray -0- -- 54,166 74,334 $ 923,838 $ 694,521
- -------------------------------------------------------------------------------------------------------------------
Dale A. Duncan -0- -- 0 24,000 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------
Eric S. Tooker 3,333 94,365.66 2,001 24,667 $ 22,203 $ 147,088
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Based on the closing price for Class A Common Stock on December 27, 1998,
which was $34.2813 per share.
DEFINED BENEFIT PLANS
We maintain the Central Newspapers, Inc. Retirement Plan (the "Pension
Plan") for our employees. The Pension Plan is a tax qualified defined benefit
plan under the Internal Revenue Code of 1986, as amended (the "Code"), and is
subject to requirements imposed under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
Employees of CNI and certain of its subsidiaries automatically become
participants in the Pension Plan on the first day of the month following
completion of at least 1,000 hours of service in a designated one year period of
employment. Benefits are fully vested upon completion of at least five years of
service. Benefits also become vested upon a participant's death, disability, or
attainment of early retirement age.
For service prior to 1994, a participant's annual retirement income under
the Pension Plan is equal to the sum of his or her basic credits and his
supplemental credits, subject to a special dollar limitation under the Code.
However, we have periodically increased the amount of retirement income payable
to participants. We contribute amounts to the Pension Plan on a periodic basis
which, when aggregated with voluntary employee contributions, are sufficient to
fund the Pension Plan in accordance with actuarial assumptions. Benefits are
payable upon normal, early, or disability retirement and deferred vested
benefits are payable on other terminations of employment. Benefits with an
actual value in excess of $5,000 are payable on a monthly basis. Under certain
circumstances, survivor benefits are payable upon the death of a participant.
For service prior to 1994, a participant generally earned basic credits
for each week's participation in the Pension Plan equal to the amount of his or
her weekly earnings, up to $312.00, multiplied by 1 7/8%. A participant could
choose to earn supplemental credits for each week of participation in the
Pension Plan by voluntarily contributing 3 3/4% of the participant's weekly
earnings over $312.00 (including salary, wages, overtime, bonuses and
contributions to the Central Newspapers, Inc. Savings Plus Plan (the "Savings
Plus Plan")) to the Pension Plan. If a participant chose to make such voluntary
contributions, he or she received supplemental credits equal to 60% of the
voluntary contributions made each week.
15
<PAGE> 20
Effective January 1, 1994 the Pension Plan eliminated the voluntary
employee contribution feature, provided future benefits based on the
participants' years of service and average compensation at retirement, and
enhanced the pension benefits of early retirees who begin receiving their
benefits before age 65. Specifically, a participant's retirement benefit for
periods of service after 1993 equals 1.20% of the participant's average annual
compensation for the highest 5 of his last 10 years of employment multiplied by
his number of years of service after 1993. Plan participants who had attained
age 50 on December 31, 1993 could elect to continue making voluntary employee
contributions and have benefits provided under the pre-1994 plan provisions. The
benefits provided to existing retirees and beneficiaries were increased by
varying amounts up to ten percent. The Internal Revenue Service has provided us
with a favorable determination as to the tax-qualified status of the Pension
Plan, as amended and restated.
The aggregate annual benefit payments receivable by a participant under
the Pension Plan are subject to a maximum benefit amount equal to the lesser of
the following amounts: (i) $125,000 in fiscal 1998 subject to specified
limitations and adjustments under the Code; or (ii) 100% of the participant's
average annual income (as defined under Section 415 of the Code) from CNI and
its subsidiaries during the three consecutive years in which the employee was a
participant in the Pension Plan and had the greatest aggregate income.
Effective January 1, 1994, we adopted a supplemental retirement plan (the
"Supplemental Plan") for those employees who are eligible for split dollar
insurance coverage under the Executive Life Insurance Plan and who make more
than $160,000 per year (as indexed for inflation each year under Internal
Revenue Service rules). The Supplemental Plan allows each participant to accrue
a benefit each year equal to: (a) the benefits that participant would be
entitled to receive under the Pension Plan without regard to the limits imposed
by Sections 401(a)(17) and 415 of the Code; minus (b) the benefits that
participant is entitled to receive under the Pension Plan. Section 401(a)(17) of
the Code provides that only the first $160,000 of an individual's annual
compensation may be considered in calculating that individual's accrued benefit
under the Pension Plan. Section 415 of the Code limits each participant to a
$125,000 (indexed for inflation) annual benefit under the Pension Plan. The
accrued benefits calculated under this formula are based solely on service on
and after January 1, 1994.
The Supplemental Plan is not tax qualified. Benefits under the
Supplemental Plan are payable solely from our general assets and are not funded
in any manner. Participants are not subject to income tax on their Supplemental
Plan benefits until these benefits are actually paid. The actuarial present
value of the Supplemental Plan benefits a participant earns each year is
currently subject to employment taxes, but will not later be subject to
employment taxes when paid to the participant.
Benefits under the Supplemental Plan are paid in a single lump sum cash
payment at the time the participant's employment terminates for any reason. If
the participant's employment terminates by reason of his or her death, the
participant's spouse or other beneficiary designated under the Pension Plan will
be entitled to a single lump sum cash payment computed in the same manner as the
death benefit he or she is entitled to receive under the Pension Plan. In lieu
of a single lump sum cash payment, each participant may make an irrevocable
election, within 30 days after becoming a participant in the Supplemental Plan,
to have his or her, his or her spouse's or his or her beneficiary's benefits
under the Supplemental Plan paid in the same form and at the same time as his or
her benefits are paid under the Pension Plan.
16
<PAGE> 21
The table below shows the estimated annual benefits expressed in single
life annuity form that would be provided by the Pension Plan and the
Supplemental Plan (if applicable) for the executive officers named in the
Summary Compensation Table if such officers had both attained age 65 and retired
on January 1, 1999. All such executive officers have made the maximum possible
voluntary contributions to the Pension Plan.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
BENEFITS AT JANUARY 1, 1999
---------------------------
<S> <C>
Louis A. Weil, III.............. $69,462
John F. Oppedahl................ $20,557
Thomas K. MacGillivray.......... $16,428
Dale A. Duncan.................. $ 3,148
Eric S. Tooker.................. $ 7,764
</TABLE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
OBJECTIVES
The Compensation Committee of our Board of Directors is responsible for
developing our executive compensation policies. The Compensation Committee has
adopted the following list of objectives to be achieved through its compensation
of executive officers:
-- Recruit, retain, and reward high performing executive talent
through the use of a combination of short-term cash and
long-term equity compensation;
-- Link annual and long-term compensation of executive officers to
the creation of shareholder value; and
-- Provide base salaries for executive officers at approximately
the 50th percentile of salaries paid for comparable positions by
other similar companies in the industry, and create annual
incentive opportunities which can increase total cash
compensation toward the 75th percentile.
TYPES OF COMPENSATION
There are two main types of compensation:
-- Annual Compensation. This includes both salary and incentive
bonus awards.
-- Long-Term Compensation. This includes stock options and
restricted stock awards.
ANNUAL COMPENSATION
Annual compensation for our executives includes base salary and incentive
bonus awards under our Annual Incentive Program.
17
<PAGE> 22
Base Salary
The Compensation Committee determines, on an annual basis, the base
salary of our Chief Executive Officer and each of our other ten most highly
compensated employees. Base salary levels for our executive officers are
targeted to fall into the middle range of salaries offered for comparable
positions by other similar companies in the newspaper industry. Merit increases
to base salaries are based upon the attainment of certain pre-negotiated,
measurable objectives relevant to our business strategy. In setting salaries for
fiscal 1998, the Compensation Committee reviewed recommendations of management
that were developed in conjunction with a compensation consultant retained by
CNI. These recommendations were prepared, in part, based upon comparative
compensation data relating to newspaper companies which actively compete with us
for executive talent, some of which are included in the index of peer companies
used to construct the performance graph which follows this report. In addition
to such recommendations, in determining an executive's base salary the
Compensation Committee took into account the executive's tenure and individual
experience, as well as the Compensation Committee's subjective assessment of
individual performance. None of the factors considered in determining base
salaries were assigned relative weights.
Effective March 2, 1998, the Compensation Committee increased by 10% the
salary paid to Louis A. Weil, III. This increase reflected, among other factors,
the Compensation Committee's subjective assessment of Mr. Weil's individual
performance, particularly his performance in putting together a new management
team and the energy and leadership he demonstrated in leading change within
Central Newspapers. Based upon information obtained from our compensation
consultant, the Compensation Committee believes that Mr. Weil's base salary is
slightly below the mid-point of the range of salaries paid to chief executive
officers by other similar companies in the newspaper industry.
Incentive Bonus Awards
Incentive bonuses are intended to serve as true incentives rather than as
a form of deferred compensation. Higher-level executives with more of an
opportunity to impact the value of CNI have the opportunity to achieve a larger
bonus than other executives.
Incentive bonuses for the executive officers named in the Summary
Compensation Table which precedes this report were determined under the Annual
Incentive Program for CNI and our primary operating subsidiaries, INI and PNI.
For the 1998 fiscal year, awards under the Annual Incentive Program were based
on CNI, operating subsidiary, and individual objectives. CNI performance was
evaluated based upon the achievement of an earnings per share goal, operating
subsidiary performance was evaluated based upon achievement of an operating
income goal, and individual performance was evaluated based upon the achievement
of certain individual objectives set by the participant and other members of
management. The earnings per share goal and the subsidiary operating income goal
were approved by the Compensation Committee. Each of the three objectives was
assigned a different weight depending on a participant's position in management,
with the achievement of the earnings per share goal for CNI being weighted most
heavily for our corporate executives (100% for Mr. Weil, Mr. Tooker and Mr.
MacGillivray), and with the achievement of the applicable subsidiary operating
income goal being weighted most heavily for executive officers of our operating
subsidiaries (70% for Mr. Oppedahl and Mr. Duncan). The size of an incentive
bonus payable under the Annual Incentive Program was determined as a percentage
of the participant's base salary, with such percentage being determined
18
<PAGE> 23
based upon (i) the participant's position in management and (ii) the actual
performance of CNI, our operating subsidiaries, and the individual participant,
as applicable, when measured against their respective objectives.
The amount of incentive bonus for 1998 paid to Mr. Weil as our Chief
Executive Officer was determined under the terms of the Annual Incentive
Program.
LONG-TERM COMPENSATION
Our long-term compensation program consists of stock options and
restricted stock awards granted through our Amended and Restated Stock
Compensation Plan. The purpose of both types of awards is to increase
shareholder value. The Stock Compensation Plan will terminate this year. You are
being asked to vote on a new plan at this year's annual meeting to replace the
Stock Compensation Plan. For a description of the new plan see Proposal No. 2.
The Stock Compensation Plan is our long-term incentive plan for executive
officers and key managers. Grants under the Stock Compensation Plan are made by
the Compensation Committee, the members of which are all non-employee directors
of the Company. Such option grants and restricted stock awards are based both on
past achievement and expected future contribution. Those individuals at higher
salary levels who have greater influence over shareholder value have the
opportunity to receive larger option awards than other executives and key
managers.
In 1998, certain officers were granted restricted stock awards under the
Stock Compensation Plan. Under the Stock Compensation Plan, the recipients of
the restricted stock awards cannot transfer their shares and must forfeit their
shares if they cease to be employees other than by reason of death or permanent
and total disability. Restrictions on most of the restricted stock awards made
will lapse five years from the date of grant, or at the end of the third or
fourth year if the market price of the Company's Class A Common Stock has
increased by a targeted annual compounded percentage. The awards of restricted
stock under the Stock Compensation Plan are not intended to be made annually but
rather to be made periodically as incentives for management retention. In
determining the amount of individual awards, the Committee considered the
recommendations of our compensation consultant and the Committee's subjective
assessment of the recipient's level of responsibility and contribution. The
factors considered by the Committee were not assigned relative weights.
One grant of stock options was made in fiscal 1998. This grant
represented the annual option grant for fiscal 1998. This grant was made using
the procedures outlined below.
To assist in determining the size of option grants, we retained an
independent compensation consultant to make specific recommendations regarding
the number of options that should be granted to each executive officer and key
manager. Such recommendations were based on the consultant's review of the
practices of newspaper companies, including some of the companies in the index
of peer companies used in constructing the performance graph which follows this
report. In determining the amount of individual grants, the Compensation
Committee also considered recommendations received from our Chief Executive
Officer (with regard to all grant recipients other than the Chief Executive
Officer himself), the size of previous option grants, internal relativity, and
the Committee's subjective assessment of the grant recipient's level of
responsibility and contribution. The factors considered by the Committees were
not assigned relative weights.
19
<PAGE> 24
With regard to option grants and awards of restricted stock made to Mr.
Weil as our Chief Executive Officer, the Committee followed the same procedure
as it did with regard to other grant recipients. The option grants made to Mr.
Weil in March matched the number of option grants recommended by our
compensation consultant and were consistent with the Committee's objectives
based on previous grants made to Mr. Weil and to others at Central Newspapers.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to a
corporation's chief executive officer and the four other most highly compensated
executive officers. Section 162(m) provides that qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements
are met. The provisions of our Stock Compensation Plan permit the grant of stock
options and restricted stock awards that qualify as performance-based
compensation for purposes of Section 162(m). None of our executive officers
received compensation in excess of the Section 162(m) deductibility limits in
fiscal 1998. The Compensation Committee will continue to consider the effect of
the deductibility limits of Section 162(m) in its future determination of
executive compensation.
William A. Franke, Chairman
L. Ben Lytle
Richard Snell
Members of the
Compensation Committee
March 9, 1999
20
<PAGE> 25
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for
CNI's Class A Common Stock, the Standard & Poor's 500 Stock Index (the "S&P
500"), and an index of peer companies.
The graph assumes that $100 was invested on December 26, 1993 in each of
CNI's common stock, the Standard & Poor's 500 Composite Stock Price Index, and
the Dow Jones Industrial Index, and that all dividends were reinvested. In
addition, the graph weighs the constituent companies on the basis of their
respective market capitalizations, measured at the beginning of each relevant
time period. Companies in the peer group are as follows: Gannett Co., Inc.;
Knight-Ridder, Inc.; Lee Enterprises, Inc.; McClatchey Newspapers, Inc.; The New
York Times Company; Pulitzer Publishing Company; The E.W. Scripps Company;
Tribune Company; and the Washington Post Company.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG CENTRAL NEWSPAPERS, INC., THE S & P 500 INDEX
AND A PEER GROUP
[TOTAL RETURN COMPARISON CHART]
<TABLE>
<CAPTION>
CENTRAL NEWSPAPERS, INC. PEER GROUP S & P 500
------------------------ ---------- ---------
<S> <C> <C> <C>
'1993' 100 100 100
'1994' 101 94 101
'1995' 120 116 139
'1996' 167 143 174
'1997' 275 214 218
'1998' 278 244 290
</TABLE>
21
<PAGE> 26
PROPOSAL NO. 2 TO BE VOTED UPON
ADOPTION OF THE CENTRAL NEWSPAPERS, INC.
1999 LONG-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE CENTRAL
NEWSPAPERS, INC.
1999 LONG-TERM INCENTIVE PLAN.
The CNI Board of Directors has unanimously approved, and recommends that
the shareholders approve, the adoption of the Central Newspapers, Inc. 1999
Long-Term Incentive Plan (the "1999 Plan"). The 1999 Plan is designed for key
employees and non-employee directors of CNI. The 1999 Plan authorizes grants of
incentive stock options ("ISOs"), non-qualified stock options ("NQSOs"), stock
appreciation rights ("SARs"), restricted stock, performance shares, and
performance-based awards.
The Board believes that using long-term incentives under the 1999 Plan
will be beneficial to CNI and will promote the success and enhance the value of
CNI by linking the personal interests of CNI's key employees and non-employee
directors to CNI's shareholders and by providing an incentive for outstanding
performance. These incentives also provide CNI flexibility in our ability to
attract and retain the services of individuals upon whose judgment, interest,
and special effort we depend. The 1999 Plan, if approved by the shareholders,
will have an effective date of May 11, 1999. As of March 1, 1999, the closing
price of our Class A Common Stock was $35.13.
ADOPTION OF THE 1999 PLAN REQUIRES APPROVAL BY THE HOLDERS OF A MAJORITY
OF THE OUTSTANDING SHARES OF COMMON STOCK PRESENT IN PERSON OR REPRESENTED IN
PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE.
The following is a summary of the material provisions of the 1999 Plan,
which is attached as Appendix A to this Proxy Statement and is incorporated by
reference into this summary description. This summary is qualified in its
entirety by reference to the 1999 Plan. Any capitalized terms which are used in
this summary description but not defined in this Proxy Statement have the
meanings assigned to them in the 1999 Plan.
ADMINISTRATION OF 1999 PLAN
The 1999 Plan will be administered by the Board's Compensation Committee.
Other than the annual option grants to non-employee directors, the Compensation
Committee will have the exclusive authority to administer the 1999 Plan,
including the power to determine eligibility, the types and sizes of awards, the
price and timing of awards, and the acceleration or waiver of any vesting
restriction, but the Compensation Committee will not have the authority to waive
any performance restrictions with respect to any performance-based awards.
ELIGIBILITY
The Compensation Committee will ultimately determine who will participate
in the 1999 Plan, but eligible persons will include all key employees (including
those who are Board members) and non-employee directors of CNI. As of March 1,
1999 there were 4 officers and approximately 4,984 employees of CNI.
22
<PAGE> 27
LIMITATION ON AWARDS AND SHARES AVAILABLE UNDER THE 1999 PLAN
An aggregate of 2,000,000 shares of CNI's Class A Common Stock, plus the
number of shares available for grant under the current Stock Compensation Plan,
is available for grant under the 1999 Plan. The maximum number of shares of
Class A Common Stock that may be subject to one or more awards to a single
participant under the 1999 Plan during any fiscal year is 150,000. The maximum
number of shares of Class A Common Stock payable in the form of performance-
based awards for a performance period is 150,000 or if such performance-based
compensation is payable in cash, the maximum amount payable will be determined
by multiplying 150,000 by the fair market value of one share of Class A Common
Stock on the first day of the performance period.
GRANTS UNDER THE 1999 PLAN
The 1999 Plan authorizes grants of ISOs, NQSOs, SARs, restricted stock,
performance shares, and performance-based awards.
STOCK OPTIONS. The Compensation Committee may grant ISOs and NQSOs to
participants, but ISOs may be granted only to CNI employees. Subject to the per
person limit described above, the Compensation Committee has the discretion to
determine the number of shares of Class A Common Stock to be awarded to each
participant.
INCENTIVE STOCK OPTIONS. An ISO is a stock option that satisfies the
requirements specified in Section 422 of the Internal Revenue Code. Under the
Code, ISOs may only be granted to employees. To qualify as an ISO, the option's
exercise price must equal or exceed the fair market value of the stock at the
date of the grant, the option must lapse no later than 10 years from the date of
the grant, and the stock subject to ISOs that are first exercisable by an
employee in any calendar year must not have a value of more than $100,000 as of
the date of grant. Certain other requirements must also be met. The Compensation
Committee determines the consideration to be paid to CNI upon exercise of any
options. The form of payment may include cash or Class A Common Stock.
NON-QUALIFIED STOCK OPTIONS. A NQSO is any stock option other than an
ISO. Such options are referred to as "non-qualified" because they do not meet
the requirements of, and are not eligible for, the favorable tax treatment
provided by Section 422 of the Code.
NON-EMPLOYEE DIRECTOR OPTION GRANTS. Beginning in fiscal 2000, each
non-employee director will automatically be granted an option to purchase 1,000
shares of CNI Class A Common Stock each year on the date of CNI's annual
shareholders' meeting. The exercise price for these options is the fair market
value of Class A Common Stock on the date of grant. The options will be fully
vested and exercisable six months after the date of grant and expire (unless
sooner exercised or forfeited) 10 years after the date of grant. The vested
portion of these options will remain exercisable for three years after the
director's status as a CNI director terminates for any reason.
STOCK APPRECIATION RIGHTS. The Compensation Committee may grant SARs that
entitle the grantee to receive an amount equal to the excess of the then fair
market value of the Class A Common Stock with respect to which the SAR is being
exercised over the price fixed by the Compensation Committee at the time the SAR
was granted. Payment is made in cash, in Class A
23
<PAGE> 28
Common Stock, or a combination of the two as the Compensation Committee
determines. The Compensation Committee will determine the time or times at which
a SAR may be exercised.
RESTRICTED STOCK AWARDS. The Compensation Committee may also issue Class
A Common Stock under a restricted stock grant, subject to the satisfaction of
any applicable conditions thereon, such as continued employment for a specified
period or the attainment of stated performance objectives. The grant would set
forth a restriction period (including a period related to the attainment of
goals) during which the shares of restricted stock granted would remain subject
to forfeiture. The grantee of an award of restricted stock generally may not
dispose of the shares prior to the expiration of the restriction period. During
this period, a grantee of restricted stock would generally have all of the
rights of a shareholder, including the right to vote the Class A Common Stock.
PERFORMANCE SHARE AWARDS. A performance share award is a contingent right
to receive a pre-determined amount if certain performance goals are met,
determined at the close of a period over which performance is measured. The
payment value of performance units will depend on the degree to which the
specified performance goals are achieved. Payment of earned performance shares
will be made in accordance with the terms set by the Compensation Committee
after the end of the measurement period for the performance unit. The amount of
payments made to any employee will be the value of the performance share for the
level of performance achieved multiplied by the number of performance shares
granted or earned by the participant.
PERFORMANCE-BASED AWARDS. Grants of performance-based awards under the
1999 Plan enable the Compensation Committee to treat restricted stock and
performance share awards granted under the 1999 Plan as "performance-based
compensation" under Section 162(m) of the Code and preserve the deductibility of
these awards for federal income tax purposes. Only "covered employees," as
defined by Section 162(m), are eligible to receive performance-based awards.
Covered employees include CNI's Chief Executive Officer and the four other most
highly compensated officers.
Participants for any given performance period are only entitled to
receive payment for a performance-based award for such period to the extent that
pre-established performance goals set by the Compensation Committee for the
period are satisfied. These pre-established performance goals must be based on
one or more of the following performance criteria:
-- net operating income,
-- pre- or after-tax net earnings,
-- sales growth,
-- operating earnings,
-- operating cash flow,
-- return on net assets,
-- return on stockholders' equity,
-- return on assets,
-- return on capital,
-- Class A Common Stock price growth,
-- stockholder return,
-- gross or net profit margin,
-- earnings per share,
-- price per share,
-- market share.
24
<PAGE> 29
These performance criteria may be measured in absolute terms, or as
compared to any incremental increase, or as compared to results of a peer group.
With regard to a particular performance period, the Compensation Committee will
have the discretion to select the length of the performance period, the type of
performance-based awards to be granted, and the goals that will be used to
measure the performance for the period. In determining the actual size of any
individual performance-based award for a performance period, the Compensation
Committee may reduce or eliminate (but not increase) the award. Generally, a
participant will have to be employed on the last day of the performance period
in order to be eligible for a performance-based award for that period. The
maximum performance-based award that may be payable to any one participant
during a performance period is 150,000 shares of Class A Common Stock or an
amount of cash equal to 150,000 times the fair market value of the Class A
Common Stock on the first day of the performance period.
AMENDMENT AND TERMINATION UNDER THE 1999 PLAN
The Compensation Committee, subject to approval of the Board, may
terminate, amend, or modify the 1999 Plan at any time; provided, however, that
shareholder approval is required for any amendment to the extent necessary or
desirable to comply with any applicable law, regulation, or stock exchange or
association rule.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES UNDER THE
1999 LONG-TERM INCENTIVE PLAN
Incentive Stock Options. An optionee will not be treated as receiving
taxable income upon either the grant of an ISO or upon the exercise of an ISO.
However, the difference between the exercise price and the fair market value on
the date of exercise will be an item of tax preference at the time of exercise
in determining liability for the alternative minimum tax, assuming that the
Class A Common Stock is either transferable or subject to a substantial risk of
forfeiture under Section 83 of the Code.
If Class A Common Stock acquired by the exercise of an ISO is not sold or
otherwise disposed of within two years from the date of its grant and is held
for at least one year after the date such Class A Common Stock is transferred to
the optionee, any gain or loss resulting from its disposition will be treated as
a short- or long-term capital gain or loss. If such Class A Common Stock is
disposed of before the expiration of the above-mentioned holding periods, a
"disqualifying disposition" will occur. If a disqualifying disposition occurs,
the optionee will realize ordinary income in the year of the disposition in an
amount equal to the difference between the fair market value of the Class A
Common Stock on the date of exercise and the exercise price, or the selling
price of the Class A Common Stock and the exercise price, whichever is less. The
balance of the optionee's gain on a disqualifying disposition, if any, will be
taxed as capital gain.
In the event an optionee exercises an ISO using Class A Common Stock
acquired by a previous exercise of an ISO, unless the stock exchange occurs
after the required holding periods, such exchange shall be deemed a
disqualifying disposition of the stock exchanged.
Non-Qualified Stock Options. No taxable income will be realized by an
optionee upon the grant of a NQSO, nor is CNI entitled to a tax deduction by
reason of such grant. Upon the exercise of a NQSO, the optionee will realize
ordinary income in an amount equal to the excess of
25
<PAGE> 30
the fair market value of the Class A Common Stock on the date of exercise over
the exercise price and CNI will be entitled to a corresponding tax deduction.
Upon a subsequent sale or other disposition of Class A Common Stock
acquired through exercise of a NQSO, the optionee will realize capital gain or
loss to the extent of any intervening appreciation or depreciation. Such a
resale by the optionee will have no tax consequence to the Company.
Stock Appreciation Rights. A recipient who receives a SAR award is not
subject to tax at the time of the grant and CNI is not entitled to a tax
deduction by reason of such grant. At the time such award is exercised, the
recipient must include in income the appreciation inherent in the SAR (i.e., the
difference between the fair market value of the Class A Common Stock on the date
of grant and the fair market value of the Class A Common Stock on the date the
SAR is exercised). CNI is entitled to a corresponding tax deduction in the
amount equal to the income includible by the recipient in the year in which the
recipient recognizes taxable income with respect to the SAR.
Restricted Stock Awards. A recipient of a restricted stock award will
recognize ordinary income equal to the fair market value of the Class A Common
Stock at the time the restrictions lapse. CNI is entitled to a tax deduction
equal to the amount of income recognized by the recipient in the year in which
the restrictions lapse.
Instead of postponing the income tax consequences of a restricted stock
award, the recipient may elect to include the fair market value of the Class A
Common Stock in income in the year the award is granted. This election is made
under Section 83(b) of the Code. This Section 83(b) election is made by filing a
written notice with the Internal Revenue Service office with which the recipient
files his or her federal income tax return. The notice must be filed within 30
days of the date of grant and must meet certain technical requirements.
The tax treatment of the subsequent disposition of restricted stock will
depend upon whether the recipient has made a Section 83(b) election to include
the value of the Class A Common Stock in income when awarded. If the recipient
makes a Section 83(b) election, any disposition thereafter will result in a
capital gain or loss equal to the difference between the selling price of the
Class A Common Stock and the fair market value of the Class A Common Stock on
the date of grant. The character of such capital gain or loss will depend upon
the period the restricted stock is held. If no Section 83(b) election is made,
any disposition thereafter will result in a capital gain or loss equal to the
difference between the selling price of the Class A Common Stock and the fair
market value of the Class A Common Stock on the date the restrictions lapsed.
Performance Shares. A recipient of a performance share award will not
realize taxable income at the time of grant, and CNI will not be entitled to a
deduction by reason of such grant. Instead, a recipient of performance shares
will recognize ordinary income equal to the fair market value of the Class A
Common Stock at the time the performance goals related to the performance shares
are attained and paid to the recipient. CNI is entitled to a tax deduction equal
to the amount of income recognized by the recipient in the year in which the
performance goals are achieved.
26
<PAGE> 31
NEW PLAN BENEFITS
The following table shows the grants that would have been made in fiscal
1999 if the plan had been in effect and the current composition of the Board was
the same. Assuming that the 1999 Plan is approved by the shareholders, no grants
will be made to non-employee directors under this plan until fiscal 2000. As of
March 1, 1999, we have made no awards under the 1999 Plan. Since awards will be
authorized by the Compensation Committee in its sole discretion, it is not
possible to determine the benefits or amounts that will be received by eligible
persons in the future (other than non-employee directors).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Louis A. Weil, III -0- -0-
Chairman and CEO
- ---------------------------------------------------------------------------------------------------
John F. Oppedahl -0- -0-
President and CEO of PNI
- ---------------------------------------------------------------------------------------------------
Thomas K. MacGillivray -0- -0-
Vice President and CFO
- ---------------------------------------------------------------------------------------------------
Dale A. Duncan -0- -0-
President of INI
- ---------------------------------------------------------------------------------------------------
Eric S. Tooker -0- -0-
Vice President, Secretary and General Counsel
- ---------------------------------------------------------------------------------------------------
Executive Group -0- -0-
- ---------------------------------------------------------------------------------------------------
Non-Employee Director Group $175,650(1) 5,000(2)
- ---------------------------------------------------------------------------------------------------
Non-Executive Officer Employee Group -0- -0-
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the closing price of a share of our Class A Common Stock on March
1, 1999.
(2) Reflecting an automatic option grant to each non-employee director to
purchase 1,000 shares on the date of the annual meeting of shareholders had
the 1999 Plan been in effect during fiscal 1999.
TERMINATION BENEFITS AGREEMENT
Louis A. Weil, III, the Chairman of our Board of Directors and our
President and Chief Executive Officer has a Termination Benefits Agreement with
Central Newspapers. This agreement, dated February 23, 1996, provides that Mr.
Weil will receive certain benefits if his employment as our Chief Executive
Officer is terminated for any reason other than cause, his death, total
disability, or attainment of age 65. In such event, Mr. Weil shall be entitled
to receive (i) a lump sum payment equal to 200% of his annual base salary on the
date of termination, (ii) a lump sum payment equal to 200% of the pro rata
portion of the bonus he would have received if he had been employed on the last
day of the year in which the termination occurred, which amount will be payable
on or before March 31 of the calender year following the termination, and (iii)
continuation of medical coverage for two years following the termination.
INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
reappointed PricewaterhouseCoopers LLP as the independent public accounting firm
to audit our financial statements for the fiscal year ending December 26, 1999.
PricewaterhouseCoopers LLP has served as our independent public accounting firm
since the 1997 fiscal year. It is expected that
27
<PAGE> 32
representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will be given the opportunity to make a statement, if they so desire,
and will respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that our directors, executive officers, and persons who own more than
ten percent of our Common Stock file initial reports with the Securities and
Exchange Commission and the New York Stock Exchange. These reports detail the
filer's ownership and changes in ownership of our Common Stock. Officers,
directors, and greater than ten percent shareholders are required to furnish us
with copies of all of the Section 16(a) forms that they file.
The Securities and Exchange Commission has established specific due dates
for the filing of these reports. We are required to disclose any failure to file
by these dates during 1998 in this Proxy Statement. To our knowledge, based
solely on review of the copies of such reports furnished to us and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to our officers and directors were complied with during
the fiscal year ending December 27, 1998.
SHAREHOLDER PROPOSALS
Shareholder proposals for our 2000 Annual Meeting must be received at our
principal executive offices no later than December 2, 1999 to be included in the
Proxy Statement and form of proxy relating to that meeting.
GENERAL MATTERS
Our By-Laws provide that business conducted at a meeting of shareholders
must be properly brought before the meeting and been determined to be lawful and
appropriate for consideration by shareholders at the meeting. To properly bring
business before the meeting of shareholders, the matter must be presented by
written notice delivered or mailed and received at our principal place of
business not less than 10 (ten) days prior to the meeting, or May 1, 1999. This
notice must include:
-- a brief description of the business desired to be brought before
the meeting;
-- the name and address, as they appear on our shareholder list, of
the shareholder proposing the matter;
-- the class and number of our shares beneficially owned by the
shareholder proposing the matter; and
-- any interest of the proposing shareholder in the matter.
DIRECTOR NOMINATIONS
Shareholders may also nominate people for election to the Board of
Directors by written notice. This written notice must be delivered or mailed and
received at our principal not less than
28
<PAGE> 33
10 (ten) days prior to the meeting, or May 1, 1999. This notice must include,
for each person nominated:
-- their name, age, business address, and residence address;
-- their principal occupation;
-- the class and number of our shares they beneficially own;
-- any other information required to be disclosed in solicitation of
proxies for election of directors or pursuant to Regulation 14A
under the Securities Exchange Act of 1934; and
-- their qualifications to serve as a director of CNI.
We may require that any proposed nominee provide additional information
necessary in determining their eligibility to serve on our Board of Directors.
You may obtain, without charge, a copy of the applicable By-law
provisions, by writing to our Corporate Secretary at our headquarters at 200
East Van Buren Street, Phoenix, Arizona.
ANNUAL REPORT
The Annual Report for our fiscal year ended December 27, 1998 is being
mailed with this Proxy Statement to all shareholders. The Annual Report is not a
part of the proxy soliciting material.
OTHER MATTERS
We are not aware of any business to come before the Annual Meeting other
than that described in this Proxy Statement. However, if any matters should
properly come before the Annual Meeting, your proxy will be voted in accordance
with the judgment of the people voting your proxy, Thomas K. MacGillivray and
Louis A. Weil, III.
29
<PAGE> 34
APPENDIX A
CENTRAL NEWSPAPERS, INC.
1999 LONG-TERM INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 General. The purpose of the Central Newspapers, Inc. 1999 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
Central Newspapers, Inc. (the "Company") by linking the personal interests of
its key employees and non-employee directors of the Company to those of Company
stockholders and by providing such individuals with an incentive for outstanding
performance in order to generate superior returns to shareholders of the
Company. The Company also intends that the Plan will provide it with the
flexibility to motivate, attract, and retain the services of key employees and
non-employee directors of the Company upon whose judgment, interest, and special
effort the successful conduct of the Company's operation is largely dependent.
ARTICLE 2
EFFECTIVE AND EXPIRATION DATES
2.1 Effective Date. The Plan is effective as of May 11, 1999 (the
"Effective Date"). Within one year of the Effective Date, the Plan will be
submitted to the shareholders of the Company for their approval. The Plan will
be deemed to be approved by the shareholders if it receives the affirmative vote
of the holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with
applicable laws and the Company's By-Laws and Articles of Incorporation. Any
Award granted under the Plan before shareholder approval is effective when made
(unless the Committee specifies otherwise at the time of grant), but no Award
may be exercised or settled and no restrictions relating to any Award may lapse
before shareholder approval. If the shareholders do not approve the Plan, any
Award previously made will be automatically canceled without any further act.
2.2 Expiration Date. The Plan will expire on, and no Award may be
granted under the Plan after, May 11, 2009.
ARTICLE 3
DEFINITIONS AND CONSTRUCTION
3.1 Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase will generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases will have the following
meanings:
(a) "Award" means any Option, Director Option, Stock Appreciation
Right, Restricted Stock Award, Performance Share Award, or
Performance-Based Award granted to a Participant under the Plan.
A-1
<PAGE> 35
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the committee of the Board described in
Article 4.
(f) "Covered Employee" means an Employee who is a "covered
employee" within the meaning of Section 162(m) of the Code.
(g) "Director Option" means an Option granted to a Non-Employee
Director under Section 12.
(h) "Disability" means a period of disability during which a
Participant qualifies for permanent disability benefits under the
Participant's employer's long-term disability plan, or if a Participant
does not participate in such a plan, a period of disability during which
the Participant would have qualified for permanent disability benefits
under such a plan had the Participant been a participant in such a plan,
as determined in the sole discretion of the Committee. If the
Participant's employer does not sponsor such a plan, or discontinues to
sponsor such a plan, Disability shall mean permanent and total disability
for purposes of Social Security.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" means, as of any given date, the fair
market value of Stock on a particular date determined by such methods or
procedures as may be established from time to time by the Committee.
Unless otherwise determined by the Committee, the Fair Market Value of
Stock as of any date will be the closing price for the Stock as reported
on the New York Stock Exchange (or on any national securities exchange on
which the Stock is then listed) for that date or, if no price is reported
for that date, the closing price on the next preceding date for which
such price was reported.
(k) "Grant Date" means with respect to Director Options, the day
of each annual meeting of the Company's shareholders beginning in 2000
and ending in, and including, 2008.
(l) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor
provision thereto.
(m) "Non-Employee Director" means a member of the Company's Board
who is not a common-law employee of the Company. For purposes of Section
4.1, a Non-Employee Director means a member of the Board who qualifies as
a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange
Act, or any successor definition adopted by the Board.
(n) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article
7 or Article 12 of the Plan to purchase Stock at a specified price during
specified time periods. An Option
A-2
<PAGE> 36
granted under Article 7 of the Plan may be either an Incentive Stock
Option or a Non-Qualified Stock Option. An Option granted under Article
12 of the Plan may only be a Non-Qualified Stock Option.
(p) "Participant" means a person who, as a key employee or
Non-Employee Director of the Company or any Subsidiary, has been granted
an Award under the Plan.
(q) "Performance-Based Awards" means the Performance Share Awards
and Restricted Stock Awards granted to selected Covered Employees
pursuant to Articles 9 and 10, but which are subject to the terms and
conditions set forth in Article 11. All Performance-Based Awards are
intended to qualify as "performance-based compensation" under Section
162(m) of the Code.
(r) "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance
Goals for a Participant for a Performance Period. The Performance
Criteria that will be used to establish Performance Goals are limited to
the following: net operating income before taxes and extraordinary
charges against income; pre- or after-tax net earnings, sales growth,
operating earnings, operating cash flow, return on net assets, return on
stockholders' equity, return on assets, return on capital, Stock price
growth, stockholder returns, gross or net profit margin, earnings per
share, price per share of Stock, and market share, any of which may be
measured either in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The Committee will,
within the time prescribed by Section 162(m) of the Code, define in an
objective fashion the manner of calculating the Performance Criteria it
selects to use for such Performance Period for such Participant.
(s) "Performance Goals" means, for a Performance Period, the
goals established in writing by the Committee for the Performance Period
based upon the Performance Criteria. Depending on the Performance
Criteria used to establish such Performance Goals, the Performance Goals
may be expressed in terms of overall Company performance or the
performance of a division, business unit or an individual. The Committee,
in its discretion, may, within the time prescribed by Section 162(m) of
the Code, adjust or modify the calculation of Performance Goals for such
Performance Period in order to prevent the dilution or enlargement of the
rights of Participants (i) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event, or
development, or (ii) in recognition of, or in anticipation of, any other
unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of,
changes in applicable laws, regulations, accounting principles, or
business conditions.
(t) "Performance Period" means the one or more periods of time,
which may be of varying and overlapping durations, as the Committee may
select, over which the attainment of one or more Performance Goals will
be measured for the purpose of determining a Participant's right to, and
the payment of, a Performance-Based Award.
(u) "Performance Share" means a right granted to a Participant
under Article 9, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain objectives or goals
established by the Committee.
(v) "Plan" means the Central Newspapers, Inc. 1999 Long-Term
Incentive Plan, as amended from time to time.
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(w) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(x) "Retirement" means termination of employment from the Company
or any Subsidiary after attaining age 60.
(y) "Stock" means the Class A common stock of the Company and
such other securities of the Company that may be substituted for Stock
pursuant to Article 14.
(z) "Stock Appreciation Right" or "SAR" means a right granted to
a Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR over the grant price of the SAR, all as
determined pursuant to Article 8 and the applicable Award Agreement.
(aa) "Subsidiary" means any corporation of which the Company
beneficially owns (directly or directly) a majority of the outstanding
voting stock or voting power.
ARTICLE 4
ADMINISTRATION
4.1 Committee. The Plan will be administered by the Board or a
Committee appointed by, and which serves at the discretion of, the Board. If the
Board appoints a Committee, the Committee will consist of at least two
individuals, each of whom qualifies as (i) a Non-Employee Director, and (ii) an
"outside director" under Code Section 162(m) and the regulations issued
thereunder. Reference to the Committee will refer to the Board if the Board does
not appoint a Committee.
4.2 Action by the Committee. A majority of the Committee will
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting will be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3 Authority of Committee. The Committee has the exclusive power,
authority, and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number
of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under
the Plan including but not limited to, the exercise price, grant price,
or purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, based
in each case on such considerations as the Committee in its sole
discretion determines;
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provided, however, that the Committee will not have the authority to
accelerate the vesting, or waive the forfeiture, of any Performance-Based
Awards;
(e) Amend, modify, or terminate any outstanding Award, with the
Participant's consent unless the Committee has the authority to amend,
modify or terminate an Award without the Participant's consent under any
other provision of the Plan.
(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or an
Award may be canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan; and
(j) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or advisable
to administer the Plan.
4.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement, and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 Number of Shares. Subject to adjustment provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for grant under
the Plan will be 2,000,000, plus the number of shares available for grant under
the Central Newspapers, Inc. Stock Compensation Plan (including any shares of
Stock that become available for grant under the Stock Compensation Plan as a
result of the forfeiture of an Award under that Plan).
5.2 Lapsed Awards. To the extent that an Award terminates, expires, or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan and shares subject to SARs or
other Awards settled in cash will be available for the grant of an Award under
the Plan.
5.3 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4 Limitation on Number of Shares Subject to Awards. Notwithstanding
any provision in the Plan to the contrary, and subject to the adjustment in
Section 14.1, the maximum number of shares of Stock with respect to one or more
Awards that may be granted to any one Participant who is a Covered Employee
during the Company's fiscal year is 150,000.
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ARTICLE 6
ELIGIBILITY AND PARTICIPATION
6.1 Eligibility.
(a) General. Persons eligible to participate in this Plan (other
than Article 12) include all key employees of the Company or a
Subsidiary, as determined by the Committee, including such individuals
who are also members of the Board. Persons eligible to receive Director
Option grants under Article 12 of the Plan include all Non-Employee
Directors of the Company.
(b) Foreign Participants. In order to assure the viability of
Awards granted to Participants employed in foreign countries, the
Committee may provide for such special terms as it may consider necessary
or appropriate to accommodate differences in local law, tax policy, or
custom. Moreover, the Committee may approve such supplements to, or
amendments, restatements, or alternative versions of the Plan as it may
consider necessary or appropriate for such purposes without affecting the
terms of the Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements, or alternative
versions will increase the number of shares of Stock available under
Section 5.1 of the Plan.
6.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards will be granted and will determine the nature and amount of
each Award; provided that the Committee does not have the authority to determine
those Participants eligible to receive Director Options under Article 12. No
individual will have any right to be granted an Award under this Plan.
ARTICLE 7
STOCK OPTIONS
7.1 General. The Committee is authorized to grant Options to
Participants (other than to Non-Employee Directors) on the following terms and
conditions:
(a) Exercise Price. The exercise price per share of Stock under
an Option will be determined by the Committee and set forth in the Award
Agreement. It is the intention under the Plan that the exercise price for
any Option be not less than the Fair Market Value as of the date of
grant; provided, however that the Committee may, in its discretion, grant
Options (other than Options that are intended to be Incentive Stock
Options or Options that are intended to qualify as performance-based
compensation under Code Section 162(m)) with an exercise price of less
than the Fair Market Value on the date of grant.
(b) Time and Conditions of Exercise. The Committee will
determine the time or times at which an Option may be exercised in whole
or in part. The Committee may also determine the performance or other
conditions, if any, that must be satisfied before all or part of an
Option may be exercised. Unless provided otherwise in a Participant's
Award Agreement, an Option will become fully vested and exercisable upon
the Participant's termination of employment on account of Retirement,
Disability, or death.
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(c) Lapse of Option. An Option will lapse under the following
circumstances:
(1) The Option will lapse ten years from the date it is
granted, unless an earlier time is set in the Award Agreement;
(2) The Option will lapse upon termination of employment for
any reason other than the Participant's Retirement, death, or
Disability, unless the Committee (at the time of grant or
thereafter) determines in its discretion to extend the exercise
period for a period of time after the Participant terminates
employment (not to exceed the Option's expiration date). To the
extent that any portion of an Incentive Stock Option is exercised
more than 90 days after the date the Participant ceases to be an
employee of the Company for reason (other than death or Disability),
the exercise of such portion will be considered the exercise of a
Non-Qualified Stock Option; and
(3) If the Participant terminates employment on account of
Retirement, Disability, or death before the Option lapses pursuant
to paragraph (1) or (2) above, the Option will lapse on the earlier
of (i) the Option's expiration date, or (ii) three years after the
date the Participant terminates employment on account of Retirement,
Disability or death. Upon the Participant's Disability or death, any
Options exercisable at the Participant's Disability or death may be
exercised by the Participant's legal representative or
representatives, by the person or persons entitled to do so under
the Participant's last will and testament, or, if the Participant
fails to make testamentary disposition or dies intestate, by the
person or persons entitled to receive the Option under the
applicable laws of descent and distribution. To the extent that any
portion of an Incentive Stock Option is exercised more than 12
months after the date the Participant ceases to be an employee of
the Company on account of Disability, the exercise of such portion
will be considered the exercise of a Non-Qualified Stock Option.
(d) Payment. The Committee will determine the methods by which
the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock that has been held
by the Participant for at least six months (through actual tender or by
attestation), or other property (including broker-assisted "cashless
exercise" arrangements), and the methods by which shares of Stock will be
delivered or deemed to be delivered to a Participant.
(e) Evidence of Grant. All Options will be evidenced by an Award
Agreement between the Company and the Participant. The Award Agreement
will include such additional provisions as may be specified by the
Committee.
7.2 Incentive Stock Options. Incentive Stock Options will be granted
only to employees and the terms of any Incentive Stock Options granted under the
Plan must comply with the following additional rules.
(a) Exercise Price. The exercise price per share of Stock will
be set by the Committee, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as of
the date of the grant.
(b) Exercise. In no event, may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
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(c) Individual Dollar Limitation. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of Stock
with respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00 or such other
limitation as imposed by Section 422(d) of the Code, or any successor
provision. To the extent that for any reason Incentive Stock Options are
first exercisable by a Participant in excess of such limitation, the
excess will be considered Non-Qualified Stock Options.
(d) Ten Percent Owners. An Incentive Stock Option will be
granted to any individual who, at the date of grant, owns Stock
possessing more than ten percent of the total combined voting power of
all classes of Stock of the Company only if such Option is granted at a
price that is not less than 110% of Fair Market Value on the date of
grant and the Option is exercisable for no more than five years from the
date of grant.
(e) Expiration of Incentive Stock Options. No Award of an
Incentive Stock Option may be made pursuant to this Plan after the tenth
anniversary of the Effective Date.
(f) Right to Exercise. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 Grant of SARs. The Committee is authorized to grant SARs to
Participants on such terms and conditions as may be selected by the Committee.
The Committee has the complete discretion to determine the number of SARs
granted to each Participant. All Awards of SARs will be evidenced by an Award
Agreement.
8.2 Right to Payment. Upon the exercise of a Stock Appreciation Right,
the Participant to whom it is granted has the right to receive the excess, if
any, of the Fair Market Value of a share of Stock on the date of exercise, over
the grant price of the Stock Appreciation Right as determined by the Committee,
which will not be less than the Fair Market Value of a share of Stock on the
date of grant in the case of any SAR related to any Incentive Stock Option.
8.3 Other Terms. The terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions
of any Stock Appreciation Right will be determined by the Committee at the time
of the grant of the Award and will be reflected in the Award Agreement.
8.4 Death or Disability. Unless provided otherwise in a Participant's
Award Agreement, a Stock Appreciation Right will be vested and exercisable if a
Participant terminates employment on account of death or Disability.
ARTICLE 9
PERFORMANCE SHARES
9.1 Grant of Performance Shares. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The
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Committee has the complete discretion to determine the number of Performance
Shares granted to each Participant. All Awards of Performance Shares will be
evidenced by an Award Agreement.
9.2 Right to Payment. A grant of Performance Shares gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
whole or in part, as the Committee will establish at grant or thereafter. The
Committee may set objectives or goals and other terms or conditions to payment
of the Performance Shares in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Shares
that will be paid to the Participant.
9.3 Other Terms. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
9.4 Death or Disability. Unless provided otherwise in a Participant's
Award Agreement, Performance Shares will be vested and exercisable if a
Participant terminates employment on account of death or Disability.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1 Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock will be evidenced by a Restricted Stock Award Agreement.
10.2 Issuance and Restrictions. Restricted Stock will be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
10.3 Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period for any reason (other than death or
Disability), Restricted Stock that is at that time subject to restrictions will
be forfeited, provided, however, that the Committee may provide in any
Restricted Stock Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part restrictions or forfeiture conditions relating
to Restricted Stock.
10.4 Death or Disability. Unless provided otherwise in a Participant's
Award Agreement, restrictions on Restricted Stock will lapse if a Participant
terminates employment on account of death or Disability.
10.5 Certificates for Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee will determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
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the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 11
PERFORMANCE-BASED AWARDS
11.1 Purpose. The purpose of this Article 11 is to provide the
Committee the ability to qualify the Performance Share Awards under Article 9
and the Restricted Stock Awards under Article 10 as "performance-based
compensation" under Section 162(m) of the Code. If the Committee, in its
discretion, decides to grant a Performance-Based Award to a Covered Employee,
the provisions of this Article 11 will control over any contrary provision
contained in Articles 9 or 10.
11.2 Applicability. This Article 11 will apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
Committee may, in its discretion, grant Restricted Stock Awards or Performance
Share Awards to Covered Employees that do not satisfy the requirements of this
Article 11. The designation of a Covered Employee as a Participant for a
Performance Period will not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period will not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant will not require
designation of any other Covered Employees as a Participant in such period or in
any other period.
11.3 Discretion of Committee with Respect to Performance Awards. With
regard to a particular Performance Period, the Committee will have full
discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.
11.4 Payment of Performance Awards. Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant will
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved. In
determining the actual size of an individual Performance-Based Award, the
Committee may reduce or eliminate the amount of the Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion, such
reduction or elimination is appropriate.
11.5 Maximum Award Payable. The maximum Performance-Based Award payable
to any one Participant under the Plan for a Performance Period is 150,000 shares
of Stock, or in the event the Performance-Based Award is paid in cash, such
maximum Performance-Based Award will be determined by multiplying 150,000 by the
Fair Market Value of one share of Stock as of the date of grant of the
Performance-Based Award.
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ARTICLE 12
NON-EMPLOYEE DIRECTOR OPTION GRANTS
12.1 Annual Director Option Grants. As of each Grant Date, each
Non-Employee Director serving as a director of the Corporation on that Grant
Date will automatically be granted a Director Option to purchase 1,000 shares of
Stock. Each Director Option will be a Non-Qualified Stock Option and will be
evidenced by an Award Agreement. The Board will have the discretion to increase
the number shares of Stock subject to grant under this Section 12.1.
12.2 Periodic Director Option Grants. The Board shall have the
authority to grant Options to Non-Employee Directors in addition to those
granted under Section 12.1. Options granted to Non-Employee Directors under this
Section 12.2 will have terms and conditions consistent with the provisions of
this Article 12 and such other terms and conditions consistent with the
provisions in this Plan.
12.3 Option Exercise Price. The exercise price for Director Options
will be the Fair Market Value as of the relevant Grant Date.
12.4 Period for Exercise. A Director Option will be exercisable any
time during the period beginning six months after the relevant Grant Date and
ending on the ten year anniversary of that Grant Date, provided that a Director
Option will become fully vested and exercisable on the Non-Employee Director's
death.
12.5 Termination of Director Status. If a Non-Employee Director ceases
to be a director of the Company for any reason, any vested Director Option will
expire on the earlier of (i) its expiration date, or (ii) three years after the
date on which his or her status as a director terminated. Leave of absence
approved by the Committee will not constitute termination of status as director.
If a Non-Employee Director terminates service because of death, any Director
Option may be exercised in whole or in part by the executor or administrator of
the Non-Employee Director's estate or by the person or persons entitled to the
Director Option by will or by applicable laws of descent and distribution. If a
Non-Employee Director ceases to be a director of the Company for any reason, any
nonvested Director Option will expire on the date the Non-Employee Director
ceases to be a director of the Company.
12.6 Payment of Exercise Price. The exercise price of a Director Option
may be paid in cash, shares of Stock that have been held for at least six month
(through actual tender or by attestation), or other property (including
broker-assisted "cashless exercise" arrangements).
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1 Stand-alone, Tandem, and Substitute Awards. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
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13.2 Exchange Provisions. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 13.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
13.3 Term of Award. The term of each Award will be for the period as
determined by the Committee, provided that in no event will the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant.
13.4 Form of Payment for Awards. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Committee determines at or after the time of grant, including
without limitation, cash, Stock that has been held by the Participant for at
least six months, other Awards, or other property, or any combination, and may
be made in a single payment or transfer, in installments, or on a deferred
basis, in each case determined in accordance with rules adopted by, and at the
discretion of, the Committee.
13.5 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or will be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
will be assignable or transferable by a Participant other than by will or the
laws of descent and distribution.
13.6 Beneficiaries. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married and resides in a community property
state, a designation of a person other than the Participant's spouse as his
beneficiary with respect to more than 50 percent of the Participant's interest
in the Award will not be effective without the written consent of the
Participant's spouse. If no beneficiary has been designated or survives the
Participant, payment will be made to the person entitled thereto under the
Participant's will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7 Stock Certificates. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with Federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on with the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
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ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1 General. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award (and the number of shares subject
thereto) will be increased proportionately without any change in the aggregate
purchase price therefor. If the Stock is changed into or exchanged for a
different number or class of shares of Stock or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
merger or consolidation, there will be substituted for each such share of Stock
then subject to each Award the number and class of shares of Stock into which
each outstanding share of Stock is exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1 Amendment, Modification and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the
Company will obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
15.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan will adversely affect in any material way any Award
previously granted under the Plan without the written consent of the
Participant.
ARTICLE 16
GENERAL PROVISIONS
16.1 No Rights to Awards. No Participant, employee, or other person
will have any claim to be granted any Award under the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
16.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3 Withholding. The Company or any Subsidiary will have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.
16.4 No Right to Employment. Nothing in the Plan or any Award Agreement
will interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
16.5 Unfunded Status of Awards. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an
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Award, nothing contained in the Plan or any Award Agreement will give the
Participant any rights that are greater than those of a general creditor of the
Company or any Subsidiary.
16.6 Indemnification. To the extent allowable under applicable law,
each member of the Committee or of the Board will be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification will not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
16.7 Relationship to Other Benefits. No payment under the Plan will be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
16.8 Expenses. The expenses of administering the Plan will be paid by
the Company and its Subsidiaries.
16.9 Titles and Headings. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, will
control.
16.10 Fractional Shares. No fractional shares of stock will be issued
and the Committee will determine, in its discretion, whether cash will be given
in lieu of fractional shares or whether such fractional shares will be
eliminated by rounding up or down as appropriate.
16.11 Securities Law Compliance. With respect to any person who is, on
the relevant date, obligated to file reports under Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it will
be void to the extent permitted by law and voidable as deemed advisable by the
Committee.
16.12 Government and Other Regulations. The obligation of the Company
to make payment of awards in Stock or otherwise will be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company will be under no obligation to register
under the Securities Act of 1933, as amended (the "1933 Act"), any of the shares
of Stock paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
16.13 Governing Law. The Plan and all Award Agreements will be
construed in accordance with and governed by the laws of the State of Indiana.
A-14
<PAGE> 48
CENTRAL NEWSPAPERS, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1999
10:00 a.m., PHOENIX TIME
CENTRAL NEWSPAPERS, INC.
200 EAST VAN BUREN STREET
PHOENIX, AZ 85004
- --------------------------------------------------------------------------------
CENTRAL NEWSPAPERS, INC.
200 EAST VAN BUREN STREET, PHOENIX, AZ 85004 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Thomas K. MacGillivray and Louis A. Weil, III, or any
of them, with full power of substitution, as proxies to vote all shares of CLASS
A COMMON STOCK held by the undersigned at the Annual Meeting of Shareholders of
Central Newspapers, Inc. to be held May 11, 1999, at 10:00 a.m., Phoenix time,
and at any adjournments thereof, on the following matters:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
ITEMS 1 AND 2 LISTED ON THE OTHER SIDE OF THIS PROXY CARD. IF ANY DIRECTOR
NOMINEE SHOULD BE UNABLE TO SERVE, THE SHARES WILL BE VOTED FOR A SUBSTITUTE
NOMINEE SELECTED BY THE BOARD OF DIRECTORS. IF ANY OTHER BUSINESS COMES BEFORE
THE MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF THE
ACTION RECOMMENDED BY THE BOARD OF DIRECTORS AND, IN THE ABSENCE OF A
RECOMMENDATION, IN ACCORDANCE WITH THE BEST JUDGEMENT OF THE PROXY HOLDERS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT - This Proxy must be signed and dated on the reverse side.
<PAGE> 49
[ARROW DOWN] Please detach here [ARROW DOWN]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of directors: 01 William A. Franke 05 Frank E. Russell [ ] Vote FOR [ ] Vote WITHHELD
02 L. Ben Lytle 06 Richard Snell all nominees from all nominees
03 Kathryn L. Munro 07 Louis A. Weil, III
04 Myrta J. Pulliam
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) [ ]
2. FOR approval of the Central Newspapers, Inc. 1999 Long-Term Incentive Plan, [ ] For [ ] Against [ ] Abstain
3. In their discretion, upon such other business (none of which is known to management of Central Newspapers, Inc. as of the
mailing date of this proxy ) as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL
Address Change? Mark Box [ ] Date 1999
Indicate changes below: -------------------------
[ ]
Signature(s) in Box
Please sign exactly and as fully as shown to the left. When shares are
held by two or more persons, all of them should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
</TABLE>
<PAGE> 50
CENTRAL NEWSPAPERS, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1999
10:00 A.M., PHOENIX TIME
CENTRAL NEWSPAPERS, INC.
200 EAST VAN BUREN STREET
PHOENIX, AZ 85004
- --------------------------------------------------------------------------------
CENTRAL NEWSPAPERS, INC.
200 EAST VAN BUREN STREET, PHOENIX, AZ 85004 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Thomas K. MacGillivray and Louis A. Weil, III, or any
of them, with full power of substitution, as proxies to vote all shares of
CLASS B COMMON STOCK held by the undersigned at the Annual Meeting of
Shareholders of Central Newspapers, Inc. to be held May 11, 1999, at 10:00
a.m., Phoenix time, and at any adjournments thereof, on the following matters:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
ITEMS 1 AND 2 LISTED ON THE OTHER SIDE OF THIS PROXY CARD. IF ANY DIRECTOR
NOMINEE SHOULD BE UNABLE TO SERVE, THE SHARES WILL BE VOTED FOR A SUBSTITUTE
NOMINEE SELECTED BY THE BOARD OF DIRECTORS. IF ANY OTHER BUSINESS COMES BEFORE
THE MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF THE
ACTION RECOMMENDED BY THE BOARD OF DIRECTORS AND, IN THE ABSENCE OF A
RECOMMENDATION, IN ACCORDANCE WITH THE BEST JUDGEMENT OF THE PROXY HOLDERS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT -- This Proxy must be signed and dated on the reverse side.
<PAGE> 51
- please detach here -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors:
01 William A. Franke / / Vote FOR / / Vote WITHHELD
02 L. Ben Lytle all nominees from all nominees
03 Kathryn L. Munro
04 Myrta J. Pulliam
05 Frank E. Russell
06 Richard Snell
07 Louis A. Weil, III
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ---------------------
ANY INDICATED NOMINEE, WRITE THE NUMBER(S) OF
THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) ---------------------
2. FOR approval of the Central Newspapers,
Inc. 1999 Long-Term Incentive Plan. / / For / / Against / / Abstain
3. In their discretion, upon such other business (none of which is known to
management of Central Newspapers, Inc. as of the mailing date of this proxy) as
may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / /
Indicate changes below; Date 1999
-----------------
---------------------------------------
---------------------------------------
Signature(s) in Box
Please sign exactly and as fully as
shown to the left. When shares are held
by two or more persons, all of them
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by president or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
